Investment trust slashed its China exposure.

Scottish Mortgage Investment Trust, one of the biggest China bulls in recent years, has slashed its exposure there, including investments in Alibaba and Tencent.

James Anderson, former co-manager, said China was an even more compelling source of tech opportunities than Silicon Valley. Around a third of its portfolio is in private companies, which it says has marked down by an average of 17.8 per cent in the six months to September 30. The new co-manager Tom Slater warned in May that the war in Ukraine was a factor that had caused a deterioration in US-China relations and that foreign investors needed to be mindful of limits Beijing might impose on investment gains. Still, he also said the trust’s China holdings remained «largely unchanged» this year. For example, Baillie Gifford invested in Alibaba in 2012, when the company was still private.

It was the £228bn Edinburgh-based asset manager’s first investment in an unlisted company. It also bought stakes in Chinese food delivery app Meituan and TikTok owner ByteDance when they were still private companies. As of September 30, Alibaba accounted for 0.9 per cent of the portfolio, down from 2.5 per cent on March 31, and Tencent for 2.8 per cent, down from 4.2 per cent. It currently has a 3.4 per cent holding in Meituan and a 2.5 per cent stake in ByteDance.

Peter Singlehurst, head of private companies at Baillie Gifford, told the Financial Times Future of Asset Management event in London this week that the firm is «not ready to walk away from China at all» and would continue to seek out «those handfuls of exceptional companies» in the country.

«If the next generation of companies were to start raising capital in renminbi, that would make it much more difficult for foreign investors to access the best companies,» Singlehurst said.

www.sba.tax

Comments

Cloud Bookkeeping

US FED rate rise.

The US Federal Reserve officials have indicated that they plan to resume increasing interest rates to control inflation in the world's biggest economy. During the June meeting, the Federal Open Market Committee reached a consensus to keep interest rates stable for the time being to evaluate whether further tightening of policy would be necessary. However, the majority of the committee anticipates that additional rate increases will be required in the future. The minutes of the meeting have recently been made public. According to the minutes, most participants believed maintaining the federal funds rate at 5 to 5.25 per cent was appropriate or acceptable, despite some individuals wanting to raise the acceleration due to slow progress in cooling inflation. Although Fed forecasts predicted a mild recession starting later in the year, policymakers faced challenges in interpreting data that showed a tight job market and only slight improvements in inflation. Additionally, officials gr...

EU business slide.

S&P Global’s flash eurozone composite purchasing managers’ index, a key gauge of business conditions for the manufacturing and services sector, fell 1 point to 47.1, figures showed yesterday. That is its lowest level since November 2020 and the fourth consecutive month below the crucial 50 mark separating growth from contraction. One of the few bright spots in the survey was that companies in all sectors reported a slight easing of cost pressures, price growth and supply chain constraints. However, prices charged for goods and services still rose at the sixth fastest rate since such data started in 2002. Jobs growth increased marginally from October but remained low compared with the past 18 months. Following a few months of falling price pressure in manufacturing and services, the October print shows an overall stabilisation said Jens Eisenschmidt, chief European economist at Morgan Stanley. However, German businesses, at the hub of Europe’s energy crisis, reported that manu...

Tariffs on UK electric cars.

The European Commission has confirmed that it will continue with its plan to impose tariffs on electric cars exported between the UK and EU starting next year. This is due to the "rules of origin" requirement that mandates EVs traded across the English Channel to have 60% of their battery and 45% of their parts sourced from the EU or UK or face a 10% tariff. A senior Commission official, Richard Szostak, recently informed parliamentarians from the UK and EU that the bloc's battery investment has significantly declined, making the tariffs necessary to encourage domestic production. In 2022, the EU's share of global investment in battery production shrank from 41% to only 2% after the US offered substantial subsidies through its Inflation Reduction Act. Starting in 2024, car manufacturers in the UK will need to have 22% of their sales come from zero-emission vehicles, which means they may need to import EVs from the continent to meet this requirement. If EU carmakers ...

Search This Blog